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Salient features of the IPO:

* Nureca Ltd. (Nureca), a B2C company engaged in the marketing of home healthcare & wellness products is planning to raise up to Rs. 1,000mn through an IPO, which opens on 15th Feb. and closes on 17th Feb. 2021. The price band is Rs. 396 - 400 per share.

* The issue comprises of fresh issue only. Of the net proceeds from the fresh issue, around Rs. 750mn will be utilized to fund the incremental working capital requirement of the company.

* On 21st Oct. 2020, Nureca issued 0.5mn shares on preferential basis to certain non-promoter shareholders at a consideration of Rs. 100 per share.

Key competitive strengths:

* Strong portfolio of products with consistent focus on quality and innovation

* Asset light business model and competitive products

* Combination of technical expertise and understanding of Indian consumer preference

* Experienced promoter with strong senior management team having domain knowledge

Risk and concerns:

* Dependence on third party for manufactured products

* Lower demand of its products or inability to correctly access the customer preferences

* Working capital intensive business

* Unfavorable forex rate movement

* Intense competition

Peer comparison and valuation:

There are no listed entities in India that are engaged in business similar to Nureca. At the higher price band of Rs. 400 per share, the company’s share is valued at a FY20 P/E multiple of 62.5x (to its restated EPS of Rs. 6.4).

Below are few key observations of the issue: (continued in next page)

* The home health market in India and neighboring countries is estimated at Rs. 207.6bn in 2019 and is expected to grow by 11% CAGR to Rs. 389.2bn by 2025. The growth will be driven by rising awareness of health & wellness, increasing spending power, growing burden of chronic diseases and the need for healthcare stakeholders to reduce healthcare costs. Nutritional supplements segment forms around 86% of the total market, followed by chronic disease products segment at 6.5%.

* Nureca is a B2C company engaged in the marketing of home healthcare & wellness products. It offers quality, durability, functionality, usability and innovative designs. The company enables its customers with tools to help them monitor chronic ailments and other diseases, to improve their lifestyle. The company sells their innovative products through a brand portfolios consisting of Dr Trust, Trumom and Dr Physio.

* It has most of the product lines supporting home health market in India, making it a one-stop solution provider. It has a diversified product portfolio, which assists it in targeting a wider customer base. Its diversified products broadly fall under following categories: chronic device products, orthopedic products, mother & child products, nutrition supplements and lifestyle products

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